• Cabinet nod to rationalise State expenses, to appoint 10 Committees
• Initiates implementation of Zero-based budgeting methodology 
• Cabinet Co-Spokesman and Minister Bandula Gunawardena says SL has to act prudently on a painful path to recovery
• Approves preparing draft Finance (Special Provisions) Bill
• Cabinet decides to release funds only for essential recurrent expenditure 

By Charumini de Silva

Cabinet Co-Spokesman and Minister Bandula Gunawardena

The Government yesterday announced a multi-step approach to cut down expenditure, and reform State-owned organisations via a tight fiscal framework. 

These plans on an aggressive route to overcome the ongoing economic crisis were announced ahead of the anticipation for the International Monetary Fund (IMF) $2.9 billion bailout package soon.

Accordingly, the Cabinet of Ministers at its meeting on Monday has approved the appointment of 10 committees to ensure a ‘zero-based budgeting’ method, in which all expenses of 10 Ministries must be justified.

The 10 committees will be chaired by either a Deputy Treasury Secretary or a senior officer of the Treasury, whilst committee members include officers to rationalise State expenditure.

“This was because of the zero-based budgeting methodology, proposed in Budget 2023 with the aim of rationalising State expenditure,” Cabinet Co-Spokesman and Minister Bandula Gunawardena told journalists yesterday.

Ministries of Transport and Highways, Public Administration, Home Affairs, Provincial Councils and Local Government, Education, Health, Agriculture, Plantation Industries, Defence, Public Security, Irrigation, and Urban Development and Housing will be subjected to a systematic review as a higher portion of allocations is made for these Ministries through the annual Budget estimations.

He said through a zero budgeting methodology double counting of programs, expenditure wastage, low priority activities and efficient and productive methodologies of utilising the allocation of existing provisions will be recognised through a systematic review.

Outlining the Government’s need to bring in fiscal discipline to overcome the economic crisis, he said certain priority areas such as cutting down unnecessary State expenditures were identified.

“Sri Lanka can no longer follow the IMF programs like successive Governments have done in the past. There are multiple conditions to bring in fiscal discipline and we need to show our commitment to achieve those targets to get the bailout tranches. This path is painful for all of us,” Gunawardena explained.

Sri Lanka had obtained IMF assistance 16 times previously.

In addition, the Cabinet of Ministers also approved preparing a draft of a Finance (Special Provisions) bill to supervise the statutory funds systematically maintained by Ministries, Departments and other State institutions and to implement a program for the purpose.

The requirement to introduce a draft bill to manage funds owned by State agencies was tabled in the Parliament by the President in his capacity as the Finance, Economic Stabilisation and National Policies Minister through the Mini-Budget 2022.

Separately, the Cabinet of Ministers has also approved directing the Secretary to the General Treasury to take necessary measures to release funds only for essential recurrent expenditure that is crucial for maintaining public services till the situation becomes favourable.

“The President informed that the Government revenue was only 8.3% of the Gross Domestic Product in 2022 amidst the economic crisis,” Gunawardena said.

He noted that in healthy Economies State revenue is around 15% to 20% of the GDP. 

“Looking at our situation, we are far below these benchmarks,” he added.

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